Cryptocurrency Ban: We Acted In Nigerians’ Best Interest ― Emefiele

The Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele
says the Bank’s decision to prohibit deposit money banks,
non-banking institutions, and other financial institutions from
facilitating trading and dealings in cryptocurrency is in the best
interest of Nigerian depositors and the country’s financial
system.

Mr Emefiele made the declaration on Tuesday, February 23, 2021,
while briefing a joint Senate Committee on Banking, Insurance and
Other Financial Institutions; ICT and Cybercrime; and Capital
Market, on its directive to institutions under its regulation.

Describing the operations of cryptocurrencies as dangerous and
opaque, the CBN Governor said the use of cryptocurrency contravened
an existing law. He said given the fact that cryptocurrencies were
issued by unregulated and unlicensed entities made it contrary to
the mandate of the Bank, as enshrined in the CBN Act (2007)
declaring the Bank as the issuer of legal tender in Nigeria.

Emefiele, who also differentiated between digital currencies,
which Central Banks can issue and cryptocurrencies issued by
unknown and unregulated entities, stressed that the anonymity,
obscurity, and concealment of cryptocurrencies made it suitable for
those who indulge in illegal activities such as money laundering,
terrorism financing, purchase of small arms and light weapons and
tax evasion.

Citing instances of investigated criminal activities that had
been linked to cryptocurrencies, he stated that the legitimacy of
money and the safety of Nigeria’s financial system was central to
the mandate of the CBN, even as he declared that “Cryptocurrency is
not legitimate money” because it is not created or backed by any
Central Bank.

“Cryptocurrency has no place in our monetary system at this time
and cryptocurrency transactions should not be carried out through
the Nigerian banking system,” he added.

Mr Emefiele also emphasized that the Bank’s actions were not in
any way, shape or form inimical to the development of FinTech or a
technology-driven payment system. On the contrary, he noted that
the Nigerian payment system had evolved significantly over the past
decade, surpassing those of many of its counterparts in emerging,
frontier and advanced economies boosted by reforms driven by the
CBN.

While urging that the issue of cryptocurrency be treated with
caution, the CBN Governor assured that the Bank would continue its
surveillance and deeper understanding of the digital space,
stressing that the ultimate goal of the CBN was to do all within
its regulatory powers to educate Nigerians on emerging financial
risks and protect our financial system from the activities of
currency speculators, money launderers, and international
fraudsters.

Also speaking, the Director-General of the Securities and
Exchange Commission (SEC), Mr Lamido Yuguda clarified that there
was no policy contradiction between the CBN directive and the
pronouncements made by the SEC on the subject of cryptocurrencies
in Nigeria. He explained that the SEC made its pronouncement at the
time to provide regulatory certainty within the digital asset space
due to the growing volume of reported flaws.

Prior to the CBN directive, he said the SEC had, in 2017,
cautioned the public on the risks involved in investing in digital
and cryptocurrency, adding that the CBN, Nigeria Deposit Insurance
Corporation (NDIC) and the SEC between 2018 and 2020 had also
issued warnings on the lack of protection in investments in
cryptocurrency.

Yuguda further disclosed that following the CBN directive, the
SEC had put on hold the admittance of all persons affected by CBN
circular into its proposed regulatory incubatory framework in order
to ensure that only operators that are in full compliance with
extant laws and regulations are admitted into the framework for
regulating digital assets.

Similarly, the Chairman of the Independent Corrupt Practices and
Other Related Offences Commission (ICPC), Professor Bolaji
Owasanoye highlighted the risks inherent in investing in virtual
assets and cryptocurrencies in Nigeria.

He explained that cryptocurrencies posed serious legal and law
enforcement risks for Nigeria due to its opaque nature and illicit
financial flows, adding that the current move by the Federal
Government to link National Identification Numbers with SIM cards
attested to the fact that terrorists, kidnappers, bandits, and
perpetrators in illegal acts had relied on the shield provided by
anonymity to commit heinous crimes.

Earlier in his welcome remarks, the Chairman of the Joint Senate
Committee, and Chairman, Senate Committee on Banking, Insurance and
Other Financial Institutions, Senator Uba Sani, said the committee
was on a fact-finding mission and had no preemptive recommendation
or stand and would make its position known only after it had
reviewed the submissions made by stakeholders.

The Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele
says the Bank’s decision to prohibit deposit money banks,
non-banking institutions, and other financial institutions from
facilitating trading and dealings in cryptocurrency is in the best
interest of Nigerian depositors and the country’s financial
system.

Mr Emefiele made the declaration on Tuesday, February 23, 2021,
while briefing a joint Senate Committee on Banking, Insurance and
Other Financial Institutions; ICT and Cybercrime; and Capital
Market, on its directive to institutions under its regulation.

Describing the operations of cryptocurrencies as dangerous and
opaque, the CBN Governor said the use of cryptocurrency contravened
an existing law. He said given the fact that cryptocurrencies were
issued by unregulated and unlicensed entities made it contrary to
the mandate of the Bank, as enshrined in the CBN Act (2007)
declaring the Bank as the issuer of legal tender in Nigeria.

Emefiele, who also differentiated between digital currencies,
which Central Banks can issue and cryptocurrencies issued by
unknown and unregulated entities, stressed that the anonymity,
obscurity, and concealment of cryptocurrencies made it suitable for
those who indulge in illegal activities such as money laundering,
terrorism financing, purchase of small arms and light weapons and
tax evasion.

Citing instances of investigated criminal activities that had
been linked to cryptocurrencies, he stated that the legitimacy of
money and the safety of Nigeria’s financial system was central to
the mandate of the CBN, even as he declared that “Cryptocurrency is
not legitimate money” because it is not created or backed by any
Central Bank.

“Cryptocurrency has no place in our monetary system at this time
and cryptocurrency transactions should not be carried out through
the Nigerian banking system,” he added.

Mr Emefiele also emphasized that the Bank’s actions were not in
any way, shape or form inimical to the development of FinTech or a
technology-driven payment system. On the contrary, he noted that
the Nigerian payment system had evolved significantly over the past
decade, surpassing those of many of its counterparts in emerging,
frontier and advanced economies boosted by reforms driven by the
CBN.

While urging that the issue of cryptocurrency be treated with
caution, the CBN Governor assured that the Bank would continue its
surveillance and deeper understanding of the digital space,
stressing that the ultimate goal of the CBN was to do all within
its regulatory powers to educate Nigerians on emerging financial
risks and protect our financial system from the activities of
currency speculators, money launderers, and international
fraudsters.

Also speaking, the Director-General of the Securities and
Exchange Commission (SEC), Mr Lamido Yuguda clarified that there
was no policy contradiction between the CBN directive and the
pronouncements made by the SEC on the subject of cryptocurrencies
in Nigeria. He explained that the SEC made its pronouncement at the
time to provide regulatory certainty within the digital asset space
due to the growing volume of reported flaws.

Prior to the CBN directive, he said the SEC had, in 2017,
cautioned the public on the risks involved in investing in digital
and cryptocurrency, adding that the CBN, Nigeria Deposit Insurance
Corporation (NDIC) and the SEC between 2018 and 2020 had also
issued warnings on the lack of protection in investments in
cryptocurrency.

Yuguda further disclosed that following the CBN directive, the
SEC had put on hold the admittance of all persons affected by CBN
circular into its proposed regulatory incubatory framework in order
to ensure that only operators that are in full compliance with
extant laws and regulations are admitted into the framework for
regulating digital assets.

Similarly, the Chairman of the Independent Corrupt Practices and
Other Related Offences Commission (ICPC), Professor Bolaji
Owasanoye highlighted the risks inherent in investing in virtual
assets and cryptocurrencies in Nigeria.

He explained that cryptocurrencies posed serious legal and law
enforcement risks for Nigeria due to its opaque nature and illicit
financial flows, adding that the current move by the Federal
Government to link National Identification Numbers with SIM cards
attested to the fact that terrorists, kidnappers, bandits, and
perpetrators in illegal acts had relied on the shield provided by
anonymity to commit heinous crimes.

Earlier in his welcome remarks, the Chairman of the Joint Senate
Committee, and Chairman, Senate Committee on Banking, Insurance and
Other Financial Institutions, Senator Uba Sani, said the committee
was on a fact-finding mission and had no preemptive recommendation
or stand and would make its position known only after it had
reviewed the submissions made by stakeholders.